Ed Miliband’s plans for the further renationalisation of Britain’s railways will create a major conflict of interests for ministers, he has been warned.

Labour is to unveil proposals that will allow public and non-profit bodies to bid to run rail franchises. The measure, which has been devised to head off demands from unions for the entire rail network to be state-run, emerged ahead of the party’s major policy summit this weekend.

The industry said that the system could be unworkable because it would lead to the government serving as “both referee and player in the competition” to run rail services